Prerequisite To Start Working As Individual Computer Consultant

[@v@nit 3]

I am planning to work as part time individual computer consultant or individual software developer (e.g.: @rentacoder.com).

To start such kind of work do need to register with some government agencies like service Tax etc. as client may ask for invoice.

Anyone please throw some light on requirements and processes to start with.

[Arun 795]

Generally if you are doing freelance work through websites like rentacoder.com, etc. they won't ask you for such invoices.

However if you are going to have local clients (direct dealing) which are bigger companies, etc. they may ask for invoice. If that is the case then you have to get a Current Account from bank as a Sole proprietorship. No registration is required for a sole proprietorship. You just have to file income tax return in your personal name.

Sales tax may be applicable depending on they type of work that you do. You have to consult with a CA to find out if that is applicable for your work. In that case you have to do sales tax registration.

[savramesh 37]

I am planning to work as part time individual computer consultant or individual software developer (e.g.: @rentacoder.com).

i have experience in doing a couple of works through rentacoder site. there you will bid a project, if won the client will pay or escrow the amount to rentacoder website. once the work is done by you and accepted by the client then the amount will be credited to you from rentacoder.

some clients will ask you to sign an NDA [download, sign, scan and upload]. some clients needs assurance [10% of project amount from your account will be given to client if work is incomplete or not done on time]

[KumaarShah 143]

@arun,

Sales Tax??? He is not selling goods, he is offering services, so Service Tax will be applicable.... Correct me if wrong.... Maybe if he packages the softwares and sells it, it becomes goods....

@ABC

For Service Tax registration also, you should contact your local consultants who offer services such as PAN number, ST/IT filing work, etc... They will help you out... Most of the superintendents in the Excise can also help you out, if you understand what I am trying to say....

Edited June 18, 2009 by KumaarShah

[Arun 795]

@arun,

Sales Tax??? He is not selling goods, he is offering services, so Service Tax will be applicable.... Correct me if wrong.... Maybe if he packages the softwares and sells it, it becomes goods....

Sorry, I meant to say Service Tax @ 10.30%. It may or may not be applicable for the type of work that he does. The types of work eligible for service tax are mentioned here: http://www.servicetax.gov.in/st-actmainpg.htm - His CA will be able to determine it.

Edit: I guess it will be applicable as per this clause:

(g) to any person, by a consulting engineer in relation to advice, consultancy or technical assistance in any manner in one or more disciplines of engineering including the discipline of computer hardware engineering.

Explanation.— For the purposes of this sub-clause, it is hereby declared that services provided by a consulting engineer in relation to advice, consultancy or technical assistance in the disciplines of both computer hardware engineering and computer software engineering shall also be classifiable under this sub-clause;

[Clause (g) substituted vide Finance Bill 2008, w.e.f. 16th May, 2008]

[@v@nit 3]

Thanks Arun, Ramesh and Kumaar for providing these helpful informations.

I will consult with CA for Service tax Registration.

[starnet 7]

Several years ago I left my job and started working as web designer through scriptlance and elance and then progressed from there.

Service tax registration is not required to start working through rentacoder and similar sites like scriptlance etc. There are 2 reasons why service tax registration is not required.

1. All income from elance etc. if received in US Dollars is free of service tax because all export income received in foreign currency against the services provided to clients based outside India is free from service tax.

2. Service tax registration is required if the amount of money received in Indian rupees earned from services supplied to clients in India is more than Rs. 10 lacs in a financial year. If your income from Indian clients billed in Indian rupees is under Rs. 10 lacs then there is no service tax payable.

Some of these freelance sites now pay coders through Paypal and Paypal funds withdrawal to Indian bank accounts is in Indian rupees. So avoid receiving payment via Paypal as much as possible to avoid crossing the Rs. 10 lacs limit in a financial year.